Indonesia plans to implement new regulations requiring ecommerce platforms to withhold taxes on sellers’ income, according to industry sources and an official document reviewed by Reuters.

This policy aims to increase revenue and create a more equitable environment for physical stores, with an announcement expected next month.

The directive will apply to major e-commerce operators, including TikTok Shop, Tokopedia, Shopee, Lazada, Blibli, and Bukalapak.

These platforms will need to withhold 0.5% of sales income from sellers with annual turnovers between 500 million and 4.8 billion rupiah.

These sellers are classified as small and medium-sized enterprises, and the platforms will be required to transfer the tax to the authorities.

Ecommerce firms have expressed concerns over the regulation, citing increased administrative costs and the potential for sellers to leave online marketplaces.

Additionally, platforms worry about the ability of Indonesia’s upgraded tax system, which has faced technical issues, to manage the additional data required.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Indonesia’s repeated attempts to tax e-commerce reflect regional pressures

This isn’t Indonesia’s first attempt to implement ecommerce tax collection through platforms. A similar regulation introduced in late 2018 was withdrawn just three months later after industry backlash 1.

The current proposal comes amid a broader regional push to capture tax revenue from rapidly growing digital economies, with Singapore implementing a 9% GST on e-commerce transactions, the Philippines charging 12% VAT on digital services, and Malaysia introducing a 6% tax on foreign digital services 2.

Indonesia’s approach aligns with Thailand’s efforts to tax foreign sellers and recover lost revenue, reflecting how Southeast Asian governments are working to formalize previously untaxed digital transactions 3.

The timing relates to Indonesia’s broader fiscal challenges, with government revenues falling 11.4% year-on-year between January and May despite the e-commerce sector’s continued growth.

2️⃣ Ecommerce taxation balances revenue goals against market growth constraints

Indonesia’s ecommerce market value of $65 billion is projected to more than double to $150 billion by 2030, creating a substantial untapped tax base that could help address the country’s revenue shortfalls 4.